Last Friday, October 27th, the Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight announced that it is providing no-action relief, subject to specified conditions, to registered swap dealers from compliance with the variation margin requirements when amending or novating swaps in existence prior to March 1, 2017 with issuers that are special purpose vehicles (legacy SPV swaps).

The CFTC's no-action relief follows a lengthy advocacy campaign by SFIG and its members spanning more than three years and including more than 20 meetings with regulators and lawmakers. During these meetings and in several comment letters and no-action relief requests, we shared the importance of relief from bilateral margin posting requirements for swaps entered into with legacy SPVs. We highlighted, in particular, our concerns regarding market impact and downgrade risk for legacy deals if permanent relief from margin posting requirements was not granted.